Post: Layaway penalised $375,000 for providing high-cost credit and unlicensed credit activity

The Federal Court has ordered Layaway Depot Pty Ltd (Layaway) pay a penalty of $375,000 for breaches of the Credit Act.

Layaway charged excessive interest rates on 70 loans taken out by consumers to buy electronic goods including mobile phones, televisions and speakers. For example, customers paid instalments which totalled $780 for a Bluetooth speaker which retailed for $200 and $1,200 for a mobile phone which retailed for just $249.

ASIC Deputy Chair Sarah Court said, ‘For a consumer to pay almost five times the market price for a mobile phone is excessive. For most of the consumers, their sole income was Centrelink benefits. ASIC will continue to take action where we see consumer harm in the provision of credit, especially where financially vulnerable consumers are involved.

‘ASIC took on this case because we believed Layaway contracts were deliberately structured to get around consumer protections that exist under the Credit Act. These protections, such as the maximum rate of annual cost that can be charged are in place to ensure credit is provided to consumers fairly, and people are not being taken advantage of.’

The Court found Layaway engaged in unlicensed credit activity and charged consumers in excess of the annual cost rate of more than 48% in respect of 70 payment arrangements.

The Court also ordered an injunction permanently restraining Layaway from engaging in a credit activity and entering into credit contracts with an annual cost rate that exceeds 48%.

Layaway consented to the orders being made.

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